PBGC coverage

[Guest Rae]

I have a DB plan with three participants, who are also the only three employees (husband, wife, and 22-year-old daughter). The husband owns 90% of the business, and his wife owns 10%. The business is not a "professional service employer."

Under section 1563(e), the daughter is not attributed any ownership since she is 21 or older. However, the "substantial owner rules" in ERISA 1322(B)(5), it states that an individual will be treated as a substantial owner w/r/t a plan if he or she was a substantial owner within the 60 months preceding the determination date.

Since the daughter only turned 21 in late 2000 and would have been attributed her parents' ownership before then, does this mean that the plan is exempt from PBGC coverage until late 2005? I think yes, but I've never needed to use this rule before, and I'd appreciate an expert opinion.

Thanks.

[Guest Chamelnix]

We had a similar situation a few years ago. Anna Gilreath at the PBGC confirmed our and your understanding - the plan is not covered until the daughter reaches age 26.

[Guest Rae]

Thank you so much!!!!